Treasury sees GDP growth of 3% in each of next two years

The Finance Ministry’s forecast is in line with the Bank of Israel’s latest estimate.

Moti Bassok |
Jun. 26, 2014 | 9:38 PM

The Finance Ministry expects Israel’s economy to grow 2.9% to 3% annually in 2015 and 2016, including revenues from natural-gas production, Yael Mevorach, deputy director of the treasury’s budget division, said Thursday.

Mevorach said the budget would focus on ways to improve labor productivity by recruiting more Israeli Arab women and ultra-Orthodox men into the workforce. In addition, government ministries will conduct gender analyses of their operations, she said, speaking at a conference on the 2015 budget at Jerusalem’s Van Leer Institute.

The Finance Ministry’s forecast, which will be used to estimate tax revenues as officials move ahead with the 2015 budget, is in line with the Bank of Israel’s latest estimate. On Monday, the central bank said gross domestic product would increase 3% next year, including natural-gas output.

Adi Brender, head of macroeconomic research and policy at the Bank of Israel, attacked the government for allegedly undertaking budget commitments it stood no chance of covering. He said this undermined trust in government.

“A citizen who listens to these promises by the government about a long school day, new roads and what have you knows ... they’ll never happen,” Brender said. “People are skeptical about the long-term aims and purposes set for the economy. A lack of confidence undermines the ability to plan.”

Avi Ben-Bassat, an economist at the Hebrew University and a former director general of the Finance Ministry and Bank of Israel official, criticized the government’s policy on poverty and economic inequality, calling Benjamin Netanyahu’s team the “most right-wing government in the West” because of its low spending on social welfare and its unprogressive tax regime.

“The government recoils from dealing with the powerful on issues of competition, monopolies and powerful unions,” Ben-Bassat said.